| Summary: | Since the introduction of activity-based costing (ABC), researchers have identified
situations where its implementation is deemed appropriate. Furthermore, a framework
for implementation has been recommended. Additionally, it is suggested that the
likelihood of installation failure increases when accounting staff sponsor the
implementation of ABC, but Cotton (1994) did not find evidence to support this
prediction. This indicates that the body of knowledge concerning the successful
implementation process of ABC is incomplete. Consequently, two case studies on
organisations that implemented ABC, Norwich Union Health Insurance (NZ) Limited
(Norwich) and Nelson Marlborough Health Services Limited (NMH), were conducted
to expand the existing body of knowledge of the implementation of ABC. The
behavioural issues relating to individuals' reactions to the implementation ofABC were
also examined.
A number of anomalies between the existing body of knowledge and these practical
examples of the implementation of ABC were found. In both cases, the decisions made
prior to implementation and the installation processes used at these firms deviated from
those recommended. Additionally, a number of previously unspecified symptoms
indicating that a firm's costing system required alteration were identified. Similarly,
additional reasons for implementing ABC were detected. Furthermore, the
recommended methods for minimising individuals' reactions to change did not appear
to be effective at NMH.
Despite the lack of generalisability and other limitations of this research, the body of
knowledge concerning the implementation of ABC has been expanded and areas for
further research have been recommended.
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